US industry group calls on USTR to urge S. Korea retract online platform regulation proposals

Korea Herald

21-03-2025

An American industry group has asked the United States Trade Representative to urge South Korea to withdraw its digital platform regulatory proposals, stressing they pose an "unnecessary irritant" to the two countries' relationship and could breach a bilateral free trade agreement.
The Coalition of Services Industries submitted the comments to the USTR last week to assist in the review and identification of "unfair trade practices and harm from non-reciprocal trade arrangements." The USTR is likely to examine the case for its calculation of "reciprocal" tariffs for Korea set to be rolled out on April 2.
In late 2023, the Korea Fair Trade Commission proposed enacting an act aimed at tightening oversight over market-dominant online platform businesses to ensure fair competition. After pushback from US stakeholders and others, it announced a new proposal in September to revise the country's existing key anti-trust law instead of seeking new legislation.
"Concerningly, the new proposal still retains problematic elements from the ex-ante proposal, such as disproportionately targeting US companies and narrowly focusing on online services that US firms provide in Korea," the coalition said.
It pointed out that other bills for digital platform regulation are also under consideration at South Korea's National Assembly.
"Korea's pursuit of discriminatory legislation against US firms is an unnecessary irritant to the longstanding bilateral relationship and a potential KORUS violation that creates an unlevel playing field for US firms competing against rapidly growing Chinese e-commerce companies," it said. KORUS is short for the South Korea-US free trade agreement.
"CSI asks USTR to urge the Korean government to withdraw both ex-ante and ex-post proposals that would significantly disadvantage US firms," it said.
During a confirmation hearing in February, then USTR nominee Jamieson Greer warned South Korea and other countries against taking regulatory measures that would negatively affect American online technology firms, saying that "it won't be tolerated."
The coalition lashed out at the KFTC, accusing it of unfairly treating US firms.
"The KFTC continues to unfairly target US companies with unprecedented fines, office raids, threats of prosecution, and attempts to harass American companies with criminal allegations and erroneous investigations," it said.
"This enforcement culture in Korea is a troubling anomaly for a closely allied US trading partner and could represent 'unfair or harmful acts, policies, or practices' that present a 'structural impediment to fair competition' per the Trump administration's recent Reciprocal Trade Memo."
It was referring to the presidential memorandum that President Donald Trump signed last month to devise a comprehensive plan to customize "reciprocal" tariffs based on trading partners' duties, non-tariff barriers, exchange rate policies and other elements.
The coalition also took issue with South Korea's telecommunications business act, which it depicted as a legal basis for allowing Korean telecommunications providers to charge online platforms for utilizing the online network.
It particularly pointed to provisions, such as a regulatory requirement to designate a domestic representative, which it said "not only add unnecessary friction to trade, but also have potential implications for taxation and are inconsistent with Korea's obligations under the Korea-US FTA."
It went on to underscore additional regulatory proposals in South Korea that require content and application providers to enter into a network use agreement with Korean internet service providers, or additionally mandate CAPs to pay "network usage fees" to Korean ISPs under the agreement.
"Failure to comply would result in the issuance of a correction order or a penalty surcharge," it said.
"These proposals would restrict the ability of US content and applications service providers to access the Korean telecommunications network on reasonable and nondiscriminatory terms and conditions, calling into question Korea's adherence to its KORUS commitments."
Moreover, the coalition highlighted South Korea's restrictions on the export of location-based data, which it claimed have led to a competitive disadvantage for international suppliers seeking to incorporate such data into services offered from outside of Korea.
"Foreign-based suppliers of interactive services incorporating location-based functions, such as traffic updates and navigation directions, cannot fully compete against their Korean rivals because locally based competitors typically are not dependent on foreign data processing centers and do not need to export location-based data," it said.
"Korea is the only significant market in the world that maintains such restrictions on the export of location-based data."
It noted that exporting geospatial data requires a license in Korea, arguing that Seoul has never approved a license to export cartographic or other location-based data, despite numerous applications by foreign suppliers.
"US stakeholders have reported that Korean officials, citing security concerns, are linking such approval to a separate issue: a requirement to blur certain integrated satellite imagery of Korea, which is readily viewable on other global mapping sites based outside of Korea," it said.
"Korean officials have expressed an interest in limiting the global availability of high-resolution commercial satellite imagery of Korea but have no ready means of enforcing such a policy since most imagery is produced and distributed from outside of Korea."
The comments came as the Trump administration plans to impose country-by-country reciprocal tariffs that will be customized based on US trading partners' tariff- and non-tariff barriers, and other factors, such as exchange rates and unfair trade practices. (Yonhap)